What are Shared Services and how can they save you money?

Mar 3, 2016

An introduction to Shared Services

As your organisation expands and diverges into departments, it will probably become increasingly apparent that each sector uses some of the same operations. These services may include human resources, finance and ICT solutions. There will therefore come a time where it makes sense to consolidate these services to improve cost-efficiency.

By creating shared services, employees will become more efficient and competent in these areas, and the business will run more professionally as operations are dealt with on a consistent basis across departments. The shared services model allows companies to implement best practice, save money and increase productivity throughout the company.

The following points show how shared services can improve cash flow for your business.

1. Lowering costs

The start-up costs of shared services can be large, but the savings in the long run will make it worthwhile. Once each department is set up, you will have a dedicated team of personnel at the disposal of the whole company.

Having a few specialists working together rather than buying in these services or leaving the roles to department managers, will lead to lower operating costs. For example, if each department of a company were hiring in their own ICT solutions, it would cost far more with callout costs than having a small, dedicated department that can be called upon by all employees. By utilising economies of scale, output can be increased while lowering running costs.

2. Improving services

By creating dedicated departments for shared services within your company, personnel can focus on the job at hand and be trained to deliver the best service possible.

With payroll, finance and ICT services running smoothly, staff morale throughout your business will increase because employees will have more positive experiences. There is nothing more frustrating than needing to get an invoice paid but your designated manager doesn’t have the time to get it done. With a dedicated finance team, there will be a specific member of staff who can handle this quickly.

Also if an employee accidentally doesn’t get paid, it may damage their motivation. With a shared service human resources department, payroll procedures can be put in place specifically designed to avoid such accidents, making situations like this far less likely to happen. Improving finance, human resources and ICT services will ultimately lead to increased productivity within the company.

3. Improving efficiency

After dedicated shared service teams are set up, these employees will become more efficient as time goes by. Shared service departments are usually set up to have a management structure and staff performance reviews, so efficiency can be optimised. So, if a company sets up an ICT shared service and implements regular computer system maintenance procedures, over time there will be fewer ICT incidents occurring.

The server would be less likely to be down and individual workstations are more likely to function as they should. By having a shared service department in place with timesaving procedures, productivity will increase. This in turn will save the company money overall. For example, if a human resources shared service is set up, procedures can be put in place so paperwork for new staff is processed quickly. The sooner new employees start, the quicker they will be trained and contribute to the productivity of the company.

Shared services provide an excellent moneysaving solution when a company expands to the point at which the demands for ICT, finance and human resources are difficult to meet.

Initial costs for setting up shared services can be high, but over time they will be absorbed into the running costs of the business. With fully functional shared services in place, money can be saved and the time it would usually take to carry out some of the necessary operations of the business will be reduced.

Increasing the efficiency of commonly used services within the company will improve staff morale, productivity and running costs.

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